The question of whether homes will ever be affordable in the Greater Toronto Area has been a topic of concern for many young Ontarians for years, particularly those earning average or relatively high-paying salaries. Unfortunately, the answer to this question is not as straightforward as we would like. In this article, we will explore the factors contributing to the high cost of housing in the Greater Toronto Area, potential solutions to address the problem, and ways individuals can manage the high cost of housing.
Factors contributing to the high cost of housing in the Greater Toronto Area
According to a task force on housing affordability set up by the Ontario government, house prices grew 180% over a decade while incomes grew only about 38% over the same period. This disparity between average incomes and house prices has made it incredibly difficult for young people to make down payments on a $1 million mortgage. As a result, many are forced to look for alternative solutions, such as renting or co-owning properties with others.
David Amborski, director of the Centre for Urban Research and Land Development at Toronto Metropolitan University, predicts that it will be “very difficult” for young people who earn solid incomes to make down payments on a $1 million mortgage. While increasing the supply of homes has been identified as necessary to blunt Ontario’s housing crisis, it is unlikely that this will significantly lower house prices in the short term.
Potential Solutions to Address the housing affordability crisis
The affordability task force recommends that Ontario build 1.5 million new homes in a decade to address the shortage. Still, it remains to be seen whether this ambitious goal can be achieved. Experts suggest that people may need to change their expectations around home ownership to enter the market. This could mean looking outside the Toronto area or buying a condo rather than a detached home or townhouse.
Co-ownership and shared equity models are alternative ways of owning a home that can make it more affordable for people. In co-ownership, two or more people own a property together and share its costs and responsibilities. Shared equity models involve two parties jointly owning a home, but one party has a larger share of the property while the other has a smaller share. These models can benefit people struggling to afford the high cost of housing in the Greater Toronto Area.
Managing the high cost of housing in the Greater Toronto Area
While it may be difficult for young people to make down payments on a $1 million mortgage, there are still ways to manage the high cost of housing in the Greater Toronto Area. One way is to consider buying a cheaper property and renting it out or to save through the new tax-free first home savings account, although, with a lifetime limit of $40,000, it won’t get you very far.
Another way to manage the high cost of housing is to look for co-ownership or shared equity models, which can make it more affordable for people to enter the housing market. Also, individuals can explore options outside of the Greater Toronto Area or consider purchasing a condo rather than a detached home or townhouse.
Government intervention is necessary
The high cost of rent in Toronto is also a significant part of the picture, and according to experts, rent may never be affordable to someone on an average income again. Affordable housing cannot be solved solely by individuals or private organizations alone. Due to the scale and complexity of the problem, government intervention is necessary. The Canadian government can use its resources, regulatory power, and policy-making authority to address the underlying factors contributing to the lack of affordable housing. For example, the government can subsidize developers to build affordable homes, enact rent control laws, or increase funding for public housing. The idea is that the government has a role to play in the making.
In conclusion, while the current housing market in the Greater Toronto Area may seem daunting for many, it is essential to remember that some alternative options and strategies can help make homeownership more attainable. It will require creative thinking, a stronger budget plan, and flexibility. Ontarians can still find a way to secure a place to call their own in the city they love.